2 Research Update: Lloyds Banking Group Life Insurance Operations 'A' Ratings Affirmed And Removed From Overview On June 9, 2015, we affirmed our ratings on Lloyds Banking Group PLC (LBG) and removed them from CreditWatch. We are therefore removing from CreditWatch, and affirming our 'A' ratings on LBG's life insurance operations, Scottish Widows PLC and Clerical Medical Investment Group Ltd. (collectively SWPLC). The stable outlook reflects that on LBG and our expectation that SWPLC will maintain the strength of its financial profile through controlled asset risk tolerances, and its business profile through defendable market positions in chosen products. Rating Action On June 9, 2015, Standard & Poor's Ratings Services affirmed its 'A' insurer financial strength and counterparty credit ratings on U.K.-based Lloyds Banking Group's (LBG) life insurance operations--scottish Widows PLC and its subsidiary, Clerical Medical Investment Group Ltd. (collectively, SWPLC). At the same time, we removed the ratings from CreditWatch, where they had been placed with negative implications on Feb. 3, The outlook is stable. Rationale The rating affirmation follows a similar rating action on the ultimate parent, Lloyds Banking Group (LBG) (see "Lloyds Banking Group Upgraded To 'BBB+', OpCo Ratings Affirmed On Government Support And ALAC Criteria; Outlook Stable," published June 9, 2015). We consider SWPLC to be strategically important to LBG. As such, the ratings on SWPLC are limited by the 'a' group credit profile of LBG. The rating affirmation also incorporates our unchanged views on the strengths of SWPLC's business and financial risk profiles. Its strengths include: a diversified product strategy with leading positions in the U.K. pension market, and prudent capital management, as defined in our criteria. Our overall assessment of SWPLC's credit strengths leads to an anchor of 'a+' or 'a'. We apply the lower outcome based on our view of risks relating to the competitive position and general business environment. For example, new business margins fell below our previous expectations due to the effects of JUNE 9,

3 Research Update: Lloyds Banking Group Life Insurance Operations 'A' Ratings Affirmed And Removed From political reforms in U.K. pensions and lower volumes of protection business. We forecast that the margin will remain below 2% in the next two years, but improve to over 2% as the group delivers profitable growth in risk products. We assess SWPLC's capital and earnings as very strong. According to Standard & Poor's risk-adjusted capital model, we view the capital as being in the 'AAA' range and anticipate that it will remain so over our two-year forecast horizon. Our overall assessment is constrained by the quality of capital. In common with many U.K. life peers, a significant proportion of total adjusted capital comprises softer items, such as future profits and hybrid equity. In addition, we believe that SWPLC invests more heavily than most of its U.K. life insurance peers in illiquid assets, such as social housing loans, as a proportion of annuity liabilities, and we expect further investment in such assets. Although we view these asset classes as bearing less credit risk than a typical loan portfolio, we consider that this investment strategy could ultimately weigh on SWPLC's capital buffers, depending on the developing profile of these loans in SWPLC's portfolio. We expect SWPLC to generate International Financial Reporting Standards (IFRS) profit before tax of about 400 million- 500 million a year in 2015 and We expect distributions of dividends will be constrained by the risk appetite governing the dividend policy and do not expect dividends to dilute capital adequacy below its current 'AAA' level per our criteria. We expect financial leverage to remain below 30%. Outlook The stable outlook reflects that on LBG and our expectation that SWPLC will maintain the strength of its financial profile through controlled asset risk tolerances, and its business profile through defendable market positions in chosen products. Downside scenario If we revised down the Lloyds Banking Group's group credit profile, then we would likely lower the ratings on SWPLC. We could also lower the ratings on SWPLC by up to one notch if we considered that: Shareholder distribution risks could increase, and that this would weaken capital and earnings to levels lower than very strong. Further debt issuance, or earnings weakness was likely to reduce fixed-charge coverage to below 4x. The underlying risks in the illiquid loan portfolio were likely to deviate from our current low risk assumptions. Upside scenario An upgrade is considered unlikely given limited rating upside potential both at the parent level and at SWPLC's level. JUNE 9,

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Outlooks On Six Insurance Groups Revised To Stable From Negative After Outlook On U.S. Revised To Stable Primary Credit Analyst: Rodney A Clark, FSA, New York (1) 212-438-7245; rodney.clark@standardandpoors.com

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Income Inequality And State Tax Revenue Trends Gabe Petek, CFA Managing Director U.S. Public Finance August 2015 Permission to reprint or distribute any content from this presentation requires the prior